Executing a Global Strategy
From the BTM Institute's Leadership Insights series of articles, Baseline showcases the article "Executing a Global Strategy," which features a one-on-one interview with the CIO of the National Grid, Kathy Lane.
Most large electric and gas utility companies in the United States operate regionally. However, one $16.6 billion utility plans to be a global powerhouse. Founded in 1990, National Grid plc, a U.K.-based utility company, has grown by acquiring local and regional power companies in the United States, primarily in the Northeast. Companies such as New England Power Co. and Massachusetts Electric Company comprise the $8.2 billion National Grid USA, a subsidiary of the U.K. parent. In 2007, National Grid plc made its most aggressive U.S. acquisition by paying $7 billion for KeySpan, a major U.S. gas and electric producer.
When Steve Holliday became the newly appointed chief executive of National Grid plc, he and his team developed a strategy for becoming a global organization and laid the foundation for the changes that needed to be made during this transformation. Holliday saw the opportunities for really driving the scale of the company and for getting the company to operate more efficiently, not just for his functions. A third-party consulting firm made a number of recommendations to help the company drive more value. One included making IT more global.
In 2006, Holliday hired Kathy Lane, the former corporate CIO for Gillette, as National Grid's first corporate CIO. Reporting directly to Holliday, Lane, along with her staff of 1,200 employees and hundreds of third-party supplementary consultants, has undertaken the challenge of changing IT from a regional structure based on the business units to one that can support the company's international growth through acquisitions.
Recently, the BTM Institute sat down with Kathy Lane to discuss the key tasks required to lay a new IT foundation. Here's what she had to say:
Q. Where does National Grid have a strong competitive edge?
We have a unique corporate strategy for the utility industry. We've taken a page out of the playbook of other industries and other companies. Some of these things have been in place for some time. After we complete the transformation of National Grid, we'll have global scale, efficient processes and a nice platform for growth.
Q. What were some of the first tasks you had to accomplish?
My initial task included looking at what things we could manage the same way. For example, we needed to leverage most of our infrastructure globally, as well as to manage it globally. We started to lay the foundation for a standard global architecture team, a computing team and a networking team. We also wanted to have standard core applications. For example, we devised a single team to run one version of e-mail for the enterprise. We set up a production support team to carry out the economic and best practices for how we support our applications globally.
Next, we looked at how we wanted to drive some functional enterprise capabilities around program management, vendor management and resource management. We put in a central structure. We lined up to support our business units. As the business units become more global, the IT teams that support those business units will mirror that structure.
Q. What has been the biggest challenge that you've faced at National Grid?
We're a young, ambitious company. Our CEO is a visionary and very dynamic leader who wants to make this an excellent enterprise. We're going through some growing pains. Having been a CIO for several large organizations, I constantly have to make sure we're doing things at the right pace. That has been an interesting challenge.
Q. Is IT part of the company's shared-services organization?
The company has a shared-services organization, but IT is not part of it. We came out of the gate before the creation of the shared-services organization. It made a lot of sense for us not to be part of shared services because we had a lot of legacy applications and processes to sort out. Our CFO manages these legacy applications, including the supply chain and the facilities.
Q. Can you describe your enterprise architecture?
We established an enterprise architecture team, and we're now working through vendor negotiations for a consistent platform. To this end, I can't be specific about out enterprise architecture. It is still a work in progress.
Many of the processes of a utility company can─and should─be managed consistently. We've gone after master data, which is the company's bloodline. We need to have consistent definitions in the use of the data. Over time, we'll be putting in place some standard, common transaction-processing capabilities, and we'll select strategic solutions for those applications, which are outside the normal space for ERP [enterprise resource planning] and enterprise asset management. I'm talking about things like our SCADA [supervisory control and data acquisition] systems, our GIS [geographic information system] and even our customer-management systems.
Q. How much of your business is regulated, and how much is non-regulated?
For the most part, we are a regulated business. In the U.K., we have some non-regulated elements, such as our metering business. We have the challenge of dealing with different regulatory bodies in the U.K. In the U.S., you have national, state and local regulators.
Q. What are your IT governance model and corporate governance model for IT?
We have very defined business units and regional governance models that tie closely to our regulatory requirements. For IT, we fold in under those governance models. We have to make sure that as we invest capital in IT we get a return on those investments. That's one piece. Next, we put governance around our technical standards, architecture standards and security standards. Because the company is pursing a global strategy and we're introducing new global functional capabilities, we need a governance mechanism to govern global initiatives. We have a way to leverage the most senior executive team in the company.
Before we had the ability to go global, we didn't have any mechanisms to get global projects approved. For example, the requirements for a security initiative would be consistent regardless of the geographic location. We used to attach that kind of initiative to perhaps a regional project. If the project was approved and funded, then the work was completed. If not, we'd have to look for another mechanism. This approach created a gap for projects with a global requirement.
Q. What processes have you put in place to speed up the integration of acquisitions, such as KeySpan?
Because of KeySpan, we developed an acquisition charter to put together an IT playbook on how we do divestitures, which we've done in the U.K., and/or how we do acquisitions. The company has taken on the job of really transforming our business processes globally. This journey will take the next several years. As we make progress on that journey, we'll find it easier to handle the acquisition integration process. We'll be able to say, 'Here is our master data, this is how we do most of our work and here are the tools we use.'
Q. What technology platforms are you considering for moving forward?
We're talking about a fundamental transformation. As an IT professional, I'm excited over this process because we have the support of senior management to do this right. We can start from the ground up and define what foundation transactional processing capabilities we want to have, and where the real competitive differentiators are for us. We might want to do proprietary solutions. Everyone has a different definition of service-oriented architecture. The applications we'll use will have an inherent SOA. However, we first need to sort through the complexity and not use technology to deal with it.
Q. What type of a methodology do you have for looking at business technology investment?
That function is still a work in progress. I'm a believer that you measure and remeasure what you do. Our dashboard covers everything from project metrics to operating expenses. We can drill down to get more detail where things look fine and where they have problems. We publish that data within the IT function; people then have access to the data. My leadership team says it's a pretty effective tool to use.
Q. How do you get involved with the major IT investments so they align strategically with the direction of the company?
We have a happy alignment of the stars here. We know that we need a portfolio-management capability or a mechanism to manage projects. We know we need a resource-management capability because we'll have inevitable contention. We've had some time to build that capability.
You work with the senior business partners and the stakeholders and get alignment around how are we going to allocate the resources that we have and what is going to be our criteria for that. That has been under way. At the same time, the company has become more mature about how it looks at that as an enterprise. We married those kinds of things together. It has been a very powerful mechanism for us. It is brought into by the company, and it is something where we say: These are the high priorities and these are the things we need to go after, and here are the resource constraints...and away we go.
Q. What process improvements do you plan to make, and how do you plan to go about making them?
We're trying to leverage our company's scale and to apply what other companies in other industries have done. We need to get a handle on what is our project portfolio, what is our transition volume, what is our network traffic, what types of data storage do we need, and what is the most efficient and effective way of providing that infrastructure.
Because of the KeySpan acquisition and this new global strategy, we have many opportunities to take a fresh look at how we should design our infrastructure and what is the most efficient and effective way to provide that to our company and to the customers. We're doing that right now. We'll look at contemporary best practices for mirroring those data centers in that infrastructure. Many of the applications we provide are critical for supporting our external customers and the basic services we provide to them. We need to do a good job of engineering these applications.
Of course, we have some baggage to deal with. We're taking a very analytical business-case-based approach and working with our customers, our legal department and our regulators to make sure IT hasn't gone off the cliff.
Q. How are you improving your organization's agility?
Most organizations find agility to be challenging. We recognize the advantage of being agile. My team and I spend a lot of time talking to our people about it. The company is the most dynamic it has ever been. Our strategy is to continue to grow and to develop.
Q. What's your philosophy about driving innovation?
If you can't get the basic job done well, you can't really innovate anything. You're just kidding yourself if you think otherwise. Being innovative in my book includes really delivering reliable and available business applications, which meet the business requirements and which people can use in a secure and ubiquitous way. You build upon this foundation by finding out what people want. You walk in their shoes as you see how they work.
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